Naira strengthens on oil supply

THE naira gained for a second day, advancing to its strongest in a week as oil firms sold dollars to meet month-end local expenses.

The currency appreciated by 0.4 per cent to N157.35 per dollar, the strongest intraday level since February 25.

Oil-producing companies, which sell dollars to meet local expenses around the month-end, are the second-biggest source of foreign currency after the Central Bank of Nigeria, which sells dollars at auctions on Mondays and Wednesdays to help manage the exchange rate.

The appreciation of the naira is “due to end-of-month dollar sales by international oil companies which increased the supply of the greenback at the interbank market,” analysts at Lagos-based Greenwich Trust Group Limited, led by Oladipupo Adekanmbi wrote in an e-mail to clients.

The CBN held the benchmark interest rate at a record high 12 per cent for an eighth straight time on January 21 to control inflation and stabilise the naira. The nation’s inflation rate fell to nine per cent in January from 12 per cent in December, the Statistics Bureau said on February 18.

The yield on the country’s 16.39 per cent domestic bonds due January, 2022 rose two basis points to 10.62 per cent, according to March one data compiled on the Financial Markets Dealers Association website.

Yields on Nigeria’s $500 million of Eurobonds due January, 2021 fell seven basis points to 4.266 per cent yesterday.